Why the Business World is Tackling Climate Change

Over the last two weeks, the city of Chennai, India has experienced the worst rains and floods in a century. The human and economic toll on this metropolis of 9 million has been enormous.

Climate change is here. It’s not a theoretical discussion, but an on-the-ground reality today. The good news is that the world is waking up and taking action. Representatives from 190 countries have just finished up a two-week mega-meeting in Paris to agree on aggressive reductions in carbon emissions (the gases that are changing the climate and weather). This enormous conclave attracted political and business leaders to support the negotiations. And over the last few weeks, dozens of CEOs from major multinationals have signed multiple statements supporting a strong global deal. The final deal commits 188 countries to reduce emissions, which will have enormous impact on economies and businesses around the world.

But many big businesses are not waiting and are already acting to reduce their carbon footprint. The majority of the world’s largest companies now have specific targets to reduce emissions, and more than 50 multinationals have committed to using 100% renewable energy.

Three big megatrends are pushing companies to climb aboard the climate action train and look hard at their impacts on the world: 1. The changing climate and its economic costs; 2. Concern about availability of resources in a crowded world; and 3. The rise of transparency and expectations of openness about companies and their products.

These new expectations are coming in particular from the hyper-connected Millennial generation. Now the largest segment of the workforce, these younger citizens want the companies they work for and buy from to have a larger purpose and do right by the world.

Let’s consider the three megatrends. First a changing climate is not good for business. On the surface, the impacts of climate change might appear like something only governments and citizens should worry about. But consider what a changing climate actually means. After 150 years of pumping global warming gases into the atmosphere, we’re clearly experiencing a hotter world: last year the average temperature across the globe was the highest in recorded history, and 2015 will certainly demolish that dubious mark… by a large margin. But it’s not just thermometers breaking; the change in the climatic system is causing much more frequent and damaging weather, including floods, droughts and storms.

In Chennai, companies are feeling the direct impacts and costs of more extreme weather. Many multinationals have factories and facilities in the region – buildings that are flooded and can’t function. Given the large expense of production shutdowns, a business can quickly go from literally to economically under water.

Or think about the challenges of managing a global food company, for example, when permanently warmer growing regions become inhospitable to the crops that normally thrive there. The increase in droughts quickly becomes a core resource constraint, not enough water to grow food or not enough water to make your product if you’re, say, a giant beverage company.

Because of these pressures, companies like Coca-Cola, General Mills and Kellogg’s have set aggressive targets to reduce carbon not just in their own operations but across their “value chains,” which means they want to measure and reduce their suppliers’ emissions, as well. This kind of systemic thinking is taking over many sectors, from consumer products to electronics to heavy manufacturing.

Adding to the pressure on business, all of their actions are taking place in a world that’s increasingly under a microscope. Technology-driven transparency is opening up everything a company does to the scrutiny of customers, communities, employees or any other stakeholders that care.

In the food industry, yet again, the pressure is rising. Consumers today want to know more about what’s in the things they eat and drink, creating what business is calling a “clean label” movement. People want to know, in essence, where their food comes from. But they also want the companies making them to manage their impacts on the world, including their contribution to climate change. They want food and other products that are made responsibly.

At one of the many business conferences running in conjunction with the official negotiations in Paris, Kellogg’s CEO John Bryant described why “addressing climate change is mission critical” for his company. He highlighted both the growing demand from consumers about how their food contributes to a sustainable world, and also the direct risk to “fragile supply chains” from weather shocks. Bryant basically described how the megatrends of climate, resources and transparency directly affect his company.

Clearly the risks to business are growing. That said, the real story on why society and companies are acting on climate change is much more positive. For business, there are multi-trillion-dollar markets in play – the world is starting to redesign transportation, energy, buildings, food, consumer products and finance to build a low-carbon society that works for all. In the end, a thriving world is a more profitable world.

And this is why, even with abundant evidence all around us, it doesn’t really matter if everyone “believes” in climate change. To support the climate discussions, former California Governor Arnold Schwarzenegger wrote a plain-spoken and powerful Facebook post making this larger point. He asks a few questions of anyone who is struggling with the move to a clean energy economy, all of which boil down to this: “Why wouldn’t you want to build a healthier and more profitable world?”

Unfortunately, climate change is not going away anytime soon, but neither is the global push to do something about it. Companies are increasingly on board because they have no choice as they face the triple threats of climate, resources, and transparency. But they’re also shifting how they do business because, as the Governor points out, it’s just a smart choice.

We now have a unique opportunity to change how the world works and build more resilient companies and cities. This is the only path to a thriving world for what will be 9 or 10 billion people, so let’s get to work.

Andrew Winston is a globally recognized advisor, speaker, and writer on business strategy and mega-trends. He is the author of The Big Pivot and co-author of the international bestseller Green to Gold.

The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, offering over 500 brands to people in more than 200 countries. Of our 21 billion-dollar brands, 19 are available in lower- or no-sugar options to help people moderate their consumption of added sugar. In addition to our namesake Coca-Cola drinks, some of our leading brands around the world include: AdeS soy-based beverages, Ayataka green tea, Dasani waters, Del Valle juices and nectars, Fanta, Georgia coffee, Gold Peak teas and coffees, Honest Tea, Minute Maid juices, Powerade sports drinks, Simply juices, smartwater, Sprite, vitaminwater, and Zico coconut water. At Coca-Cola, we’re serious about making positive contributions to the world. That starts with reducing sugar in our drinks and continuing to introduce new ones with added benefits. It also means continuously working to reduce our environmental impact, creating rewarding careers for our associates and bringing economic opportunity wherever we operate. Together with our bottling partners, we employ more than 700,000 people around the world.

The fairlife® brand is owned by fairlife, LLC, our joint venture with Select Milk Producers, Inc., and fairlife’s products are distributed by our Company and certain of our bottling partners.